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Byte.com: Analyzing Microsoft's Corel Investment

Oct 16, 2000, 20:32 (2 Talkback[s])
(Other stories by Tom Henderson)

"Faced with a horrible death, Corel received the transfusion of a life time from its most vocally (and now formerly) feared opponent and competitor. Microsoft, early this month, invested $135 million into Corel in the form of preferred stock purchase. The implications could be staggering, both for Linux and for the entire computing community. The mind reels at visions of the future...."

"Probable CausePerhaps the reason that Microsoft has invested in Corel is simple: if Corel would declare bankruptcy, it could cite Microsoft's illegal market domination as a root cause. This would give Canadian and U.S. bankruptcy judges potential opportunity to add to Microsoft's legal woes as a potential claimant. The day after Microsoft invested in Corel, Microsoft saw its stock drop nearly 10 percent, while Corel's doubled...."

"Storming Linux (please excuse the multiple entendre) might actually be a good ploy for Microsoft, especially when apps can be developed in conjunction with a Linux distro maker with 24 million shares that it owns. And while Corel Linux might not have an especially strong share of Linux desktop use, Corel's one-stop-shop approach to OEM markets could be lucrative for Microsoft. That is if Corel's sales aren't thwarted or distracted by developing Dot Net. There are more players watching the chessboard. A few weeks ago, at NetWorld+Interop 2000 in Atlanta, another event occurred that may have helped motivate Microsoft as well. At the opening keynote, Red Hat's Bob Young announced the release of Red Hat 7. One of the more interesting characteristics of Red Hat 7 is that there are now specific server versions available."

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